Pension Ben. Guar. Corp. v. Beverley

• Decision Date: 12 April 2005
• Docket Number: No. 04-1371.,04-1371.
• Parties: PENSION BENEFIT GUARANTY CORPORATION, Plaintiff-Appellee, v. Donald R. BEVERLEY; Martha H. Beverley, Defendants-Appellants, and Don's Trucking Company, Incorporated, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

404 F.3d 243

PENSION BENEFIT GUARANTY CORPORATION, Plaintiff-Appellee, v. Donald R. BEVERLEY; Martha H. Beverley, Defendants-Appellants, and Don's Trucking Company, Incorporated, Defendant.

No. 04-1371.

United States Court of Appeals, Fourth Circuit.

April 12, 2005.

Argued: November 30, 2004.

Decided: April 12, 2005.

ARGUED: Paul McCourt Curley, Canfield, Baer, Heller & Johnston, L.L.P., Richmond, Virginia, for Appellants. Merrill D. Boone, Pension Benefit Guaranty Corporation, Office of the General, Washington, D.C., for Appellee. ON BRIEF: Robert Allen Canfield, Canfield, Baer, Heller & Johnston, L.L.P., Richmond, Virginia, for Appellants. James J. Keightley, General, William G. Beyer, Deputy General, Karen L. Morris, Assistant General, Pension Benefit Guaranty Corporation, Office of the General, Washington, D.C., for Appellee.

Before TRAXLER, GREGORY, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge TRAXLER and Judge DUNCAN joined.

GREGORY, Circuit Judge:

This case involves Pension Benefit Guaranty Corporation's ("PBGC" or "plaintiff") claims of unfunded benefits liability under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1362(a) and (b), which stems from the termination of Don's Trucking Company Defined Benefit Pension Plan (the "Plan"). PBGC filed a complaint against the Plan's sponsor, Don's Trucking Company ("Don's Trucking"), claiming that members of Don's Trucking's controlled group, including Donald R. Beverley ("Don Beverley" or "Mr. Beverley") and Martha H. Beverley ("Martha Beverley") (collectively "the Beverleys" or "defendants"),¹ and the alleged partnership between the Beverleys, were liable for the unfunded benefits under ERISA. The Beverleys appeal the district court's order granting PBGC's motion for summary judgment. Defendants raise several issues on appeal, however, finding no error, we affirm the district court.

I.

Don's Trucking established the Plan, effective June 1, 1988, to provide retirement benefits to its employees. The Beverleys own Don's Trucking and each serve as two of the three officers and directors of the company. Don's Trucking was the administrator and contributing sponsor of the Plan.

Since the 1980s the Beverleys have also owned certain properties, 1801 Coxendale Road and 1811 Coxendale, in Chester, Virginia ("Coxendale Properties"). Since purchasing the Coxendale Properties the Beverleys have leased part of the properties to Don's Trucking and occasionally have leased part of the properties to other tenants.

PBGC is a wholly-owned United States government corporation, established under 29 U.S.C. § 1302(a) to administer the pension plan termination insurance program created by ERISA, codified at 29 U.S.C. §§ 1301-1461 (2000 & Supp. I 2001) ("Title IV").² PBGC assures the timely payment of guaranteed pension benefits to participants in pension plans that terminate when covered by Title IV. See 29 U.S.C. §§ 1302(a)(2), 1321, 1322 (2004).

By agreement between PBGC and Don's Trucking, the Plan was terminated in August 1997, with insufficient assets. See 29 U.S.C. § 1342. Subsequently, as statutory trustee, PBGC sued Don Beverley as the Plan fiduciary for improper transfers of Plan assets ("fiduciary liability suit") pursuant to 29 U.S.C. § 1109.³ In April 2001, PBGC obtained a judgment against Don Beverley in the amount of $358,044.40 plus post judgment interest. Don Beverley has not satisfied the judgment against him.

PBGC filed a civil action against Martha Beverley and Don Beverley, individually the alleged Beverley Partnership, and Don's Trucking in United States District Court for the Eastern District of Virginia. PBGC asserted that Don's Trucking as contributing sponsor was liable to PBGC under 29 U.S.C. § 1362(a)-(b)⁴ ("employer liability"). See 29 U.S.C. § 1362 (providing that employer liability springs from plan termination). PBGC also alleged that there was a general partnership between Don Beverley and Martha Beverley for the primary purpose of leasing real estate ("Beverley Partnership"). Thus, PBGC argued, under § 1362, that Don's Trucking, as contributing sponsor, and the Beverley Partnership, as the sponsor's controlled group, were jointly and severally liable to PBGC for employer liability. PBGC also claimed that, as the general partners of the Beverley Partnership, Don Beverley and Martha Beverley are jointly and severally liable for its debts, including employer liability to PBGC. See id.

On cross-motions for summary judgment⁵ the district court granted PBGC's motion and denied the Beverleys' motion. The district court awarded judgment to PBGC jointly and severally against each defendant in the amount of $366,181.51, plus interest minus any monies actually recovered on the fiduciary liability judgment. The Beverleys timely filed this appeal.

II.

We review a district court's summary judgment ruling de novo, viewing the evidence in the light most favorable to the losing party. Goldstein v. The Chestnut Ridge Volunteer Fire Co., 218 F.3d 337, 340 (4th Cir.2000); Binakonsky v. Ford Motor Co., 133 F.3d 281, 284-85 (4th Cir.1998). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. Rule 56 also states that "when a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves").

Rule 56(e) also requires that "affidavits submitted by the party defending against a summary-judgment motion contain specific facts, admissible in evidence, from an affiant competent to testify, `showing that there is a genuine issue for trial.'" 10B Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 2740, at 399 (1998). Once the movant has established the absence of any genuine issue of material fact, the opposing party has an obligation to present some type of evidence to the court demonstrating the existence of an issue of fact. See Pine Ridge Coal Co. v. Local 8377, UMW. 187 F.3d 415, 422 (4th Cir.1999).

III.

The Beverleys contend that the district court erred when it concluded that the doctrines of res judicata and election of remedies did not bar PBGC's claim against Don Beverley. Defendants also argue that the district court erred in concluding that Martha Beverley intended to form a partnership with Don Beverley for the purpose of leasing the Coxendale Properties. We will address each of defendants' claims in turn.

A.

To analyze defendants' res judicata claim we must first review the origin and principal purpose of the PBGC. Congress created the PBGC with one central purpose — "to prevent `great personal tragedy' suffered by employees whose vested benefits are not paid when pension plans are terminated." Pension Benefit Guar. Corp. v. Carter & Tillery Enters., 133 F.3d 1183, 1186 (9th Cir.1998) (quoting Nachman Corp. v. PBGC, 446 U.S. 359, 374, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980)). PBGC is funded primarily through premiums paid by pension-plan sponsors. PBGC is mandated by statute to maintain such premiums "at the lowest level" consistent with Title IV's purposes. See 29 U.S.C. § 1302(a)(3). PBGC carries out this mandate by enforcing the various claims provided to PBGC under Title IV.

When a pension plan terminates with insufficient assets to fund the benefits it has promised to pay, Title IV imposes joint and several liability on the plan's contributing sponsor and each member of the sponsor's "controlled group." 29 U.S.C. § 1362(a).⁶ A "controlled group" is a group of trades or businesses related by common ownership, determined under regulations prescribed by the Secretary of the Treasury. 29 U.S.C. § 1301(a)(14)(A) and (B). In its corporate capacity, PBGC has a claim against the controlled group for the total amount of the Plan's unfunded benefit liabilities to all participants and beneficiaries, as of the Plan's termination date, together with interest from the termination date — employer liability. See 29 U.S.C. § 1362(b)(1).⁷

As provided by statute, PBGC may and typically does seek to be appointed as statutory trustee of plans that terminate with insufficient assets. 29 U.S.C. § 1342(b)(1). As statutory trustee, PBGC may assert claims on behalf of the plan, 29 U.S.C. § 1342(d)(1)(B)(ii), against its fiduciaries based on breaches of their fiduciary duty, 29 U.S.C. § 1109(a), such as improper transfers of plan assets. 29 U.S.C. § 1106.

Don Beverley argues that the district court erroneously held that PBGC obtained its prior judgment against him in its representative capacity as Plan trustee, in contrast to the second action in which PBGC filed its lawsuit against defendants in its corporate capacity.⁸ Mr. Beverley alleges that it was an established fact that PBGC had previously obtained a judgment on the merits against him stemming from the same transaction or series of transactions, thus the second suit was barred by res judicata. In addition, Mr. Beverley contends that the district court illogically granted him a credit for any amounts recovered by PBGC in the fiduciary liability judgment, which in his estimation is in direct contradiction to the district court's ruling concerning identity or privity of parties. Don Beverley avers that the "cre...